A chance at Cancun to make trade democratic

Sumiah, 26, hails from Mojokerto, East Java. A permanent employee in a furniture factory for more than eight years, last year she was made a part-time worker, along with some 200 others. Their employer told them that the company needed to be “flexible” to stay in business.

As a result, Sumiah no longer receives overtime or “menstruation leave”. She is no longer protected by the state-run workers’ insurance scheme (Jamsostek). If she is fired, she will receive no redundancy pay as legally-speaking she cannot actually be fired — to get rid of her all the employer has to do is refuse to renew her weekly contract. Every Monday morning, together with or sometimes hundreds of other workers, she checks the announcement board near the factory gate to see if her name is on the list of workers hired for the week.

The “Washington Consensus” on the global economy states that the labor market needs to be “flexible” as a precondition for investment to take place. This simply means that labor is only a function of production. The higher the production, the more labor can be employed — and vice versa. The clear consequence is that only contract labor will be needed.

Sumiah’s story and the issue of labor is among those to be discussed in Cancun, Mexico, during the fifth WTO Ministerial Meeting from Sept. 10 to Sept. 14 — an issue that comes under the prestigious title of “business services”.

Free trade or, at the least, very low tariffs on trade is the basic philosophy of the World Trade Organization. Free trade means more than just no tariffs, it also means no indirect obstacles to trade. Hence, the WTO is also in favor of deregulation and liberalization, at least where it relates to trade. Whether it shares a strong preference for market-based solutions is a moot question.

The UN Conference on Trade and Development (UNCTAD) noted that there are 40,000 corporations in the world whose activities cross national boundaries. These firms access overseas markets through some 250,000 foreign affiliates. The top 200 global firms account for an alarming and growing share of the world’s economic activity.

No doubt, trade plays a significant part in these figures. Trade brings prosperity through the delivery of goods and services, with economic growth and technological advancement both shaping it and being shaped by it. Trade even contributes to more open and democratic governance.

But inequality remains and the gap both within and between rich and poor countries seems to be widening. In 1960, the richest fifth of the world’s population received 70 percent of global income compared to 2.3 percent of global income for the world’s poorest 20 percent. By 2001, the richest 20 percent had increased their share to more than 85 percent of global income while the bottom fifth’s share had shrunk from 2.3 percent to less than 1 percent (UN Development Report, 2002).

The problem is not in trade itself, but in its current patterns and practices. Trade practices that neglect everything else in favor of profit alone must be stopped. The concerns expressed by many about the trade process must be acknowledged and addressed in any development model since these concerns affect the daily lives of billions.

But we sense powerlessness, despite all the rhetoric of participation. Most countries are now WTO members, but membership does not equate with influence. Many developing countries have limited or non-existent representation in Geneva. Nineteen of the 42 African WTO members have zero representation.

Many other developing countries lack the technical capacity to negotiate meaningfully for the rules have already been set based on developed country models, which can be inappropriate and prohibitively expensive for poor countries. In fact, many WTO signatories have been unable to comply with agreements negotiated under the earlier Uruguay round.

If we want a balanced and inclusive world trading system that attracts developing countries, much needs to be done to enhance these countries’ capacities to participate in the rule-making process, to move away from the “one size fits all” approach and to ensure that its implementation does not place unreasonable financial and technical burdens on those least able to bear them.

We need to work with others on issues and solutions. This means partnerships within and between countries and their external supporters; and partnerships among these external supporters themselves. It is only in this light that this fifth WTO Ministerial Meeting will be relevant to the world as a whole.

Properly conceived globalization means much more than merely market integration. It also means — and requires — working together towards agreed solutions to global problems.

And these solutions need to be developed in a cooperative and transparent way that explicitly includes the priorities of the poorest countries and their peoples. We need an increasingly inclusive approach to development issues in general and to poverty reduction. More particularly fair trade, not free trade, as the heart of our “new” globalization, must be the foundation of all our business practices and trading endeavors in an increasingly interdependent 21st century world.

As to a workable framework for action by ministers, the draft of the Ministerial Text for Cancun reads, “We believe (the framework) constitutes an adequate and manageable basis for discussion, and we hope it will prove a useful tool in our search for common ground in Cancun.” This “common ground” should be the democratization of trade practices through business accountability.

It is something of an irony that the “power of capital”, as reflected in the development of world trade, seems to have been exempted from the criteria of public accountability.

Thus, Cancun is a chance to make trade accountable and democratic. This “one world” cannot remain split along a fault line that separates the rich from the poor, like those in Sumiah’s position.

Trade alone will not bridge this divide. Rather, our sense of common humanity must be our shared bond, and must form part of one united endeavor.

Otherwise, such transnational institutions like the WTO will only trade life away for profits.

The writer is the Executive Director of the Business Watch Indonesia, a lecturer at Sahid University in Surakarta and a researcher with Uni Sosial Demokrat, Jakarta.